Thursday, 24 April 2008

Incase you haven't heard, the real estate market is about to take a little knock. Yesterday the stats for inflation were released and inflation has jumped to a 5 year high of over 10%. This does not bode well for real estate markets in South Africa and it most certainly does not bode well for interest rates.

The problem is, we're expecting another 2 interest rate hikes this year. That means R1 000 000 house at a good rate (going rates are currently -1.7 / -1.8 below prime) will cost you:

R 12 653.00 per month

This is alot of money considering not even a 1 year ago the same bond was costing you:

R9321.31 per month

How many people do you know that get an annual increase of R3332 when we have an economy that's really having to fork out alot of additional funding just to keep their businesses running, with costs of fuel, electricity and generators jumping through the roof.

Tuesday, 22 April 2008

Today I officially starting feeling really bad. It's been over a week since I've blogged anything and not because I haven't had anything to write about but purely because I've been too lazy!

So I'm off my fat a$ and I'm BACK! We're also going to make a conscious effort to change the layout and look of the property blog! Any hints and assistance from our regular readers would be awesome, so please feel free to email me your ideas wizardmidrand@gmail.com or just leave a comment.

But today is all about bridging finance.

What is bridging finance? By definition: Bridging finance is a short term loan normally associated with gap finance required between the purchase of a new property and sale of an old one.

When purchasing a property there are those hidden costs that are often not given to you upfront. The agent will conveniently forget to mention it or the bond originator you use forgets to tell you when trying to get that bond or yours or even better, you decided to do your bond yourself and those lovely friendly helpful bank agents don't' even bother telling you cause you're meant to know these things dammit!

Now, we all know that there are home loan offerings from all the banks that will include your bond registration and transfer costs in the bond. Some banks call this a 108% loan, others call it a bond PLUS costs and some refer to it as a first time buyers loan.

Remember you only qualify for costs inclusive in your home loan if you are a first time buyer and you can afford it. People who get costs included in their home loans on second puchases and third purchases are LUCKY, they've slipped through the credit managers eyes somehow.

Some banks in South Africa DO NOT PAY your bond registration and transfers costs upfront! They only pay you these costs once you have paid them yourself, I believe Standard Bank work like this. This poses some major problems for home purchasers and the reason they asked for bond costs included in your home loan was because you can't afford to fork this money out upfront...

Well, this is where bridging finance comes to the rescue. Although many attorneys offer bridging finance be very careful to read through the terms and conditions before signing anything.

Wizard have partners that are certified and reliable bridging finance providers offering some of the lowest rates available in South Africa today. Check out our bridging finance section on our site for more information.

It is a while now that the NCA is in play and we have seen that interest rates have climbed and the market has certainly moved and swung more to a buyers market than a sellers market.

Indications are that this is where we will hover for the next 12 to 18 months as world markets settle, food markets settle and we as the players in this market assist folks who are our clients in remaining settled as well.

We are starting to have a life style that costs like it does everywhere else in the world - one way or another - who knows maybe one day we will be serving Zimbabweans as waiters at their restaurants one day - ha!!

Panic strikes in many hearts but do not let it strike in yours - the good news is that living in Africa is a challenge and we thrive on challenges.

So here are some of my thoughts...

BANKS - You have to feel empathy here as they are in the business of making money but need to be very cautious of how and who they lend their money to.

One of the most interesting facts is the way the banks have changed to adapt to NCA over the past few months.

Whereas before you would get a bank financing approval within 5 working days, that's changed 100%. If there is any doubt by a credit manager for whatever reason then you will be stuck with a decline on your loan request - this is even if they cannot read a name/number etc - for the smallest reason - they are terrified that if they lend and get seen to lend recklessly for whatever reason the bank will get nailed - and so they probably will .

The impact - 10 to 15 working days for loan grants - if you are lucky.

So what's occurring is that unless you disclose everything 100% and have EVERY SINGLE REQUIRED UP TO DATE DOCUMENT and THE BANKS GET IT RIGHT THE FIRST TIME then turnaround times are 7 to 10 WORKING DAYS . So be patient and treat your bank right.

Treat each person at the bank like a client with the respect you expect back - it pays great dividends - that's why your reputation is great - lets keep it that way.

Manage your expectations correctly. The truth is always the only way to go, even if its bad news.

Remember - unless you provide ALL the documents that are asked of you the deal will not happen. You cannot get instant finance - because they are exceptions not norms.

Treat each person in the bank, your originator, your agent, your salesman with the respect you expect back - it pays great dividends - that's why your reputation is great - lets keep it that way.

EASTER PERIOD and HOLIDAYS

Something to remember is that everyone, banks, estate agents, salesman, clients, families etc make these holidays a very tough time for all of us. They also need to take leave and if they have kids this is when they do it. So do we all. It means things don't happen as they should during these periods. Be part of this solution not the pain that comes with holidays. If we are going to have problems - it will bite you during and after these holidays - so bite the bullet and be ready for next time.

GENERAL

So the market has changed, but so have we and we need to keep changing and adapting to get better and better. There are very interesting opportunities coming up right now, so lets keep our eyes peeled and ears wide open.

Thursday, 10 April 2008

Another interest rate hike has slapped us on the rear! Tito Mboweni announced that the reserve bank was to raise the repo rate by 50 basis points to 11.5% thereby increasing South Africa's interest rate to 15%.

Not all bad news though! For those of you putting in a little extra every month, the interest you earn on your money has just been raised by another .5%.

Well as we all know, it's interest rate decision time again today! I know everyone expecting a interest rate hike but if anyone listened to the FNB Property Guru on Radio 702 this morning things aren't looking that way....

According to FNB, hiking our interest rates again will not curb inflation but will in fact damage the economy even more. The reason being that the sudden increase in the cost of living in South Africa and rising inflation is a GLOBAL problem not local, and hiking the interest rate will not curb inflation as inflation is currently being affected due to the increase in fuel prices, food prices and weakening rand.

So what can we expect??? Well I think we can expect 14.5% interest for the rest of the year!

Wednesday, 9 April 2008

Paris Hilton, hehe, you must be joking, just looking for some good link bait so people will start commenting on my BLOG again. Pretty sad isn't it! Anyways... Here is a pretty good article. Some positive prospects for the South African Property Market.

Looking Ahead

Slow market but property is still a valuable asset.

Reports show that the property market has hit a seven year low and the slow down should be seen as evening out of a significantly higher base value. That’s good, especially for buyers.

According to bank reports interest rates are likely to remain high for 2008 and that the South African Reserve Bank will keep rates on hold due to the visible slowdown in consumer demand. However, the unfavorable short-term outlook for inflation means that the risk of further interest rate increases remains, which places further strain on household finances.

There are a few options that can provide you with some interest rate relief:

Extend your bond term to 30 years thus reducing the monthly repayment. This does mean that your interest amount will increase over the term of the loan.

Another alternative is to consider fixing your home loan rate for one or two years. Then your monthly home loan repayment will always be the same, therefore, creating peace of mind.

Arrangements can be made if experiencing difficulties in maintaining your monthly payment:

Arrange with your bank to pay arrears over a stipulated period of time (catch up the arrears installments over an agreed period)

Reducing payment for a period (after this period you must have the ability to make your normal repayments)

All these arrangements are great news for home owners, therefore, love your home and make a plan and ask for assistance.

Friday, 4 April 2008

Once again we need to keep our eyes open dealing with banks, many banking clients aren’t sufficiently informed about their new rights because of the banks’ new responsibilities under the National Credit Act.

Clients need to be aware that they need to be informed about the full cost of credit. This includes your principle debt, all the interest you will pay, the initiation fee, administration costs and credit insurance. This pre-agreement /quotation must stand for 5 business days, which allows you to go to competitors and compare offers. Therefore, if you sign the final credit agreement it is assumed that you understand and agreed to it, you will not get any sympathy if you complain after signing.

But…….. you can turn to the ombudsman if you think the bank was reckless in lending you money as the credit legislation requires banks to do their homework before extending your credit. You can also contact the ombudsman if the bank increases the limit on your credit card/overdraft without your agreement. They may only increase your credit once a year – only by a limited amount and with your approval.

If you’re unhappy with the investment advice you’ve received from representatives of you bank you could also consider contacting the ombudsman.

Tuesday, 1 April 2008

It's a sad sad day in South African today, where the banks have officially closed the doors on bond originators. As of 12:00am this morning ABSA, STD, FNB & NEDBANK are no longer paying commission to bond originators for business brought to them...

This statement not yet released to the public means companies like, Bond Choice, MortgageSA, Ooba, Wizard Home Loans and other will need to rely on companies that offer securitization such as SA Homeloans.